Our 15 Philosophical Principles
1. Let People Be Themselves
Most corporations compel their employees to hide their personalities and suppress their emotions under the pretense of promoting professionalism and maintaining order, even though their true aim is to mold them into easily controllable subjects. We don't believe people should ever be treated this way, which is why we do the exact opposite. We encourage our employees to act the same way at work as they do at home: to be open, emotional, and creative; and to play, laugh, and have fun. As a result of having this freedom to express their individuality and utilize their creative abilities, our employees find it much easier to fully engage in their work and interact more naturally with our clients, both of which are prerequisites to providing great service.
2. Utilize the Leadership Principle--Personal Responsibility for One's Actions & Decisions
Modern corporations are peculiar entities. They are composed of people yet function more like machines--emotionless, impersonal, automatic, mechanistic. How strange! Why is that? We believe it is a product of the way most corporations attempt to achieve their goals and vision. Most business leaders, whether they are conscious of it or not, believe people must be managed, not led. As a consequence, they believe the only way an organization can achieve its goals and vision is to command and control its employees like soldiers, or program them like machines. This system does indeed work in many cases, but it's not without its drawbacks. The major drawback is that it transforms people from lively, spirited human beings into lifeless, soulless machines. Now, the battle plan, or mechanism, of this command and control management method is detailed below.
In a command and control led organization, a top-down functional hierarchy is used to force plans upon and make decisions for its employees. When a company uses this approach to conduct its yearly planning process, its board members, who represent the shareholders, and its executives, who represent the employees, meet in isolation to create a vision and set of primary goals. After this initial planning session, the executives cascade the vision and goals down a pyramidal hierarchy to the executives, upper management, middle management, and, at the very base of the pyramid, to the employees who do the billable work. As the few primary goals are being cascaded down the hierarchy, they are broken down into numerous smaller goals and each superior assigns them to his or her inferior. Next, an individual performance plan is drawn up so that each superior can track the progress of his or her inferior over a one year period. At each level of the hierarchy, the superiors and their inferiors then get together each quarter so that the former can grade the latter on how well they are performing. At the end of the one year period, the performance of each employee is graded on how well they executed their individual plans. In theory, if most employees fully executed their individual plans and the primary goals have been met and were well-aligned with the customers' needs--which should be the case if the board and executives did their jobs--the company will meet or exceed its financial goals, the company will increase in value, and the shareholders will be willing to invest even more money into the company the following year.
Even the most ardent critics of command and control leadership, such as ourselves, cannot deny that it has been responsible for many successes over the years, and is often the most expedient way to run a large centralized organization. In our opinion, however, it is hardly the best way to run a large federally decentralized or small to medium-sized organization; in other words, it is not the most effective way to run many businesses. There are six major drawbacks to it:
- Financial measures such as gross revenue and net profit, which are lagging indicators, are mistakenly given priority over customer-based measures, such as quality of service and speed of delivery.
- Financial goals are often arbitrary, unrealistic, and misaligned with an organization's purpose and vision.
- There are usually too many goals and measures, making it difficult for employees to know which ones are the most important, causing them to waste time on unimportant activities.
- People who do the billable work usually have little to no input on the creation of the goals and vision--a lost opportunity to harness their invaluable knowledge, leading to a lack of buy-in from them.
- The goals and performance plans are rigid, making it difficult to quickly change course if business conditions suddenly change--which they always seem to do!
- People are stripped of their humanity, transforming them into spiritless robots.
These six negative side effects can eventually lead to the distortion of systems and processes, the formation of hostile fiefdoms, people doing the wrong things right, key measures being falsified to make the company look good rather than it being good, and an overall feeling of distrust and cynicism spreading its way throughout the organizational ether.
So how can these drawbacks be avoided? The answer is simple. Modern corporations must revive the ancient leadership principle. They must give their employees the freedom to organize themselves into small teams; let the team choose the natural leader; give the leader full responsibility for the success or failure of the team; create individual and common goals that align with the purpose and vision of the team and, if applicable, the larger group, or organization, they are a small but an essential part of; and give the leader the power to hold everyone responsible for doing their jobs as they work towards achieving these goals. True leaders help people work together towards a common goal, not by using force, but by drawing out everyone's innate talents and abilities so they can grow and develop as individuals and learn how to manage themselves. Our company fully accepts this more natural, timeless approach to leading people. As a result, our company functions like a living organism rather than a lifeless machine. It feels, thinks, and grows and evolves naturally over time in response to the needs of our customers, enabling us to make use of the more natural, cyclical, self-regulating planning process shown below.
3. Provide Great Service, & Profits Will Naturally Follow
Achieving our yearly goals and attaining our long term vision is predicated upon habitually repeating the following cycle. If we (1) routinely determine what our clients' needs are; (2) offer services that fulfill these needs; (3) build systems and processes that deliver high quality services, obtain regular feedback from our clients, and make continuous improvements and occasional innovations in response to this feedback; (4) use the best technology currently available; (5) keep a neat, clean, and orderly workplace along with properly maintaining our equipment; (6) recruit, hire, train, and retain good, intelligent, hard-working people who can execute these steps on a regular basis; then (7) profits and cash flow will naturally follow, without us even having to make them the primary object of our desire. This bottom-up approach to planning might sound blasphemous, or even backwards, to those who are accustomed to using the traditional top-down approach described earlier, but our track record over the last 10 years is proof that it works. Despite having never set a hard financial target during this time, our revenue has grown steadily year after year and is expected to do so again this year. For those of you who are interested in learning more about this bottom-up cyclical approach, a more detailed description of the entire seven-step process is shown below:
Identify a target market--our clients--and determine what their real needs are.
Offer services that fulfill the clients' needs, obtain feedback regularly to ensure these needs are being met consistently, and allow the services to evolve naturally over time in response to this feedback.
Create clean, simple, flexible systems and processes that deliver high quality services, manage them over time (using client feedback and key performance indicators [KPIs] when necessary), continuously improve them in response to this feedback, and innovate when change is predicted to occur or suddenly occurs without warning.
Make use of the best cloud and field equipment technology currently available, but resist the urge to throw the most advanced technology at every problem.
Keep a neat, clean, and orderly workplace, and minimize downtime by routinely organizing, cleaning, and servicing our equipment, vehicles, garage, office, and virtual space.
Recruit, hire, train, and retain good, intelligent, hard-working people, and hold them responsible for executing steps 1-5. Trust people, give them freedom, treat them with respect, and reward them for their successes. Be open and honest with one another, provide one another with regular feedback, and work as a team. Let natural leaders be chosen for that role by their peers.
Consistently Fulfill Our Clients' Needs→ Generate Repeat Business & Referrals → Increase Revenue, Profits & Cash Flow → Hire More Employees → Increase Revenue, Profits & Cash Flow → Increase Salaries, Profit Sharing & Provide Better Benefits → Improve lives & Society! → Repeat Step 1
4. Understand Systems Theory
An organization is one large system composed of multiple subsystems which form various interconnections with one another to work together on fulfilling a common purpose. The performance of a system cannot be maximized by dividing it into subsystems, or parts, and making an attempt to maximize the performance of each part in isolation from the rest; otherwise the performance of one or more of these parts might be improved at the expense of the whole. The performance of a system can only be maximized by optimizing all of the interconnections between its various parts, even if this means occasionally reducing the individual performance of one or more of these parts to the benefit the whole. Therefore, instead of separating our company into individual parts, or departments, and attempting to maximize the performance of each one in isolation from the rest, we continuously optimize all of our company's interconnections to maximize its performance as a whole.
5. Work as a Team
Because we are a service company whose systems often require information to be transferred from one person to another, the most important interconnections within our company are the relationships between people. Thus, in order for our organization to function well as a whole, it is imperative that our employees work together as a team. This doesn't mean we always expect everyone to agree with one another, be good friends, and socialize with one another outside of work, but we do expect them to be responsible to one another, respect one another, provide regular support to one another, and to help one another out when there is a problem.
6. Do Your Job!
This principle is merely a continuation of the previous one. To optimize all of the various interconnections within our company and keep them running smoothly on a regular basis, all that we require is for each person to do his or her job on a daily basis. Failure to do so will lead to one's dismissal. It's as simple as that.
7. Be Open & Honest With One Another
We expect our employees to be open and honest with one another about their needs and problems. Firstly, personal and professional needs must be brought to one another for a one-on-one discussion and both parties must work together on doing what is necessary to satisfy them. Secondly, problems must be brought to one another for instant conflict resolution rather than remaining quiet about them and bringing them to a mediator at a later date. For if problems remain hidden and are allowed to fester for too long, the eventual resolution of them by a mediator ends up creating a child-parent relationship between the mediator and the two disputants. Over time, this over-reliance on a mediator can lead to a loss of the disputants' freedom, increasing the power of the mediator until he or she becomes a de facto manager. This process, if allowed to continue unchecked for several years, will eventually lead to the creation of a large, glutinous management team who continuously expands its own power at-and on-the company's expense.
8. Provide One Another With Regular Feedback
We encourage our employees to give one another honest, constructive, real-time feedback to facilitate learning and promote skill development. This can only be accomplished when (1) the giver of the feedback is honest with the recipient about what needs to be done to improve his or her performance, (2) the recipient of the feedback deflates his or her ego and listens attentively to what the giver of the feedback has to say, (3) both parties reciprocate, and (4) innate personality differences are not attacked. This daily feedback process functions as an alternative to the structured annual performance plan, which, despite still being the tool of choice for grading performance at most corporations, has been proven to be ineffective, wasteful, and, worst of all, soul destroying.
9. Continuously Improve & Occasionally Innovate
Rather than setting arbitrary targets and trying to attain them by any means necessary, we focus on continuously improving our systems and processes, the means by which our services are provided. For example, each time our employees utilize a particular system or process, we expect them to think about whether it can be improved or not. If it can, they are expected to make a change to it. Once this change has been made, the revised system or process is tested repeatedly to determine if it is an improvement over the existing one. If it is, the change is made a permanent addition to it; if not, the change is discarded. It is only by repeatedly making these small, incremental improvements over time, while also sharing this knowledge with our entire team, that we are able to make large-scale improvements to our systems and processes across the entire organization.
Although continuous improvement helps us make progress on a daily basis, on certain occasions innovation is also needed to provide a quick response against sudden change. When our clients' needs are predicted to change or suddenly change without warning or new technology becomes available, we have no choice but to innovate our existing systems and processes by completely redesigning them or creating new ones from scratch. This enables us to respond to major industry shakeups, enter new markets, and offer new services when opportunities arise.
10. Keep Things Clean & Simple
We prefer to keep things as clean and simple as possible but no simpler than this necessary minimum. This makes it easier to run, manage, and maintain our systems, processes, methods, equipment, vehicles, and cloud technology, while at the same time ensuring that no vital information is omitted. Hence, the only time we increase complexity is when it is absolutely necessary.
11. Minimize Rules & Policies
Rules and policies sound good in theory but usually only end up creating artificial barriers between people. Whenever one of our team members receives an external request from a client or an internal request from a colleague, we expect the recipient of the request to fulfill it immediately. However, this type of a quick response is only possible when rules and policies are kept to a minimum and do not interfere with this process. Therefore,the only time we create new rules and policies is when they are absolutely necessary and wholly indispensable.
12. Share Information with Everyone
Information begets knowledge, and knowledge is power. Hence, to avoid the formation of a top-down functional hierarchy and the creation of individual departments and hostile fiefdoms, we share information freely among all employees. This is why we provide full access to our profit and loss statements, balance sheets, and cash flow statements and go over this information together on a routine basis. We also display our financial and non-financial key performance indicators (KPI) on a dashboard in our office lobby on a big-screen TV. This provides our employees with a real-time snapshot of our company's health, enabling them to immediately adjust their behavior based on this feedback.
13. Share Profits with Everyone Who Deserves Them
At the end of each year, between 20-25% of our net profits are shared and distributed among our employees. This keeps everyone fully committed to our company's purpose and long term vision, causing them to think and act like shareholders rather than hired hands.
14. Be Pragmatic: Keep What is Useful & Discard What Isn't
Before deciding whether or not a theory, system, process, or method is useful, we first put it into practice. If it's useful, we keep it; if not, we discard it. Below is a list of some of the things we do and don't do as a result of this process, the latter of which includes many traditional business practices currently taught at business schools and practiced at most Fortune 500 companies:
- Give people freedom
- Let people be themselves
- Keep things clean and simple
- Minimize rules and regulations
- Trust people and treat them with dignity and respect
- Treat our employees like adults
- Educate people rather than market or sell them our services
- Maintain open and honest communications with one another
- Hold people responsible for providing high quality service
- Obsess over making the client happy
- Research, purchase, and use the best available technology
- Work remotely when we feel like it
- Share and display financial and non-financial data with our partners
- Share profits with our entire team
- Pay our employees a living wage
- Use official job titles
- Set rigid financial targets
- Use a formal organization chart
- Conduct traditional business planing
- Conduct traditional financial planning
- Boss people around and tell them what to do
- Use yearly individual performance reviews
- Create too many rules or policies
- Track our employees' time and location
- Have too many meetings (sometimes to a fault)
- Turn people into robots
- Treat people like children
15. Give Up on Utopia!
Although we truly believe our way of doing business is better than doing it the traditional way, we are not naive enough to believe utopia will follow. Like all other ways of running an organization, this one has its own specific set of limitations, drawbacks, and challenges. For instance, since we have hardly any controls in place, it's always possible that one of our employees will drive a company vehicle off normal business hours, not contribute enough to the team, sneak home early, or steal supplies. Every so often we do hire someone who commits one or more of these offenses. Once they are caught we do not punish them. We simply make it clear to them that such behavior won't be tolerated here, and if they do it again and get caught, their employment will be terminated. In most cases they end up doing it again, and thence are immediately released. During the aftermath of such an incident, however it might play out, it is easy to start questioning our beliefs and to seriously consider creating and enforcing new preventative rules, regulations, and punishments to avoid another similar occurrence in the future. But it is during this time we stay fully committed to our beliefs and resist the urge to build in controls. For if we don't, one new rule might lead to another, setting the stage for the eventual destruction of our culture, the one that has thus far led to our success.